Government Cuts to Green Energy Subsidies

Earlier this month the UK Government announced several cuts to green energy subsidies in a bid to drive down costs for consumers. Amber Rudd, Energy and Climate Change Secretary, stated that ‘reducing energy bills for British families and businesses and meeting energy goals in the most cost-effective way’ are to be their priorities and that the measures set out will do just that.

The new measures will target multiple green energy sources with onshore wind, solar and the Green Deal predominantly in the firing line.

Onshore Wind

New subsidies for onshore wind farms are to be curbed on the grounds that the technology should be financially self-supporting and save bill payers money.

In a statement from Amber Rudd, she claims that onshore wind was an important part of the mix but limits are being reached of what is affordable. She says that this change “draws the line in the right place” and that consumers’ bills should not rise as a result.

Solar Farms

Despite claims that solar industries were one of the cheapest that the government could use to meet its climate change targets, plans have been set in motion to see subsidies for new solar farms to close by 2016.

The growth of the solar power sector has left ministers panicking about forthcoming potential budget overspend, hence their decision to cut subsidies. They later revealed, however, that removing support for this budding industry would save energy consumers just 50p per year.

Supporters say that the growth of small scale solar farms has helped to drive down the cost of solar and that it is at a critical stage in its development. Solar energy is drawing close to being able to support itself without any subsidy and cuts to subsidies at this stage could devastate the industry.

Green Deal

The Green Deal, a scheme set in place to help home owners make energy-saving improvements to their homes, is another of the green energy subsidies to be axed.

According to the Department for Energy and Climate Change the decision was made in order to “protect taxpayers” and cited “low take-up and concerns about industry standards”.

While the Government vows to work with the building industry and consumer groups to provide a new replacement incentive that works, nothing has yet been projected.

Summary

The government feel that the support for renewable energy - which is paid for by households - is set to rise above agreed levels over the coming years. They claim that their support for renewables has helped to drive down the cost considerably and as costs continue to fall it is becoming easier for many of the green energy sectors to survive without subsidies.

To the contrary, there have been calls for a level playing field for renewables in relation to nuclear energy and fracking in with regards to subsidies. However, Amber Rudd acknowledged that subsidies to the nuclear industry would exceed those going to renewables (in particular, solar) stating that nuclear provided "a different type of electricity".

Others are concerned that as we are approaching a time where renewable industries are able to do without subsidy they are faced with a reduction in support that could greatly hinder their progress.